For a landlord, the economics of running an urban apartment complex can be dismal. Tenants without a sense of home ownership may damage the property, and with an average turnover of 100% every two years, losses from vacancy are high. Tenants also suffer. Constant turnover may leave the community vulnerable to crime and disruption, and families may struggle to provide children a stable place to learn and grow.
Wharton alum K. Robert “Bobby” Turner has a solution.
His proposal: Build the complex near a school and offer dramatically reduced rent to local teachers in exchange for a few hours of tutoring at an onsite mentoring lab. Subsidize a few other units for local police officers. Result: crime drops, the apartment stabilizes, community grows — and profits for the landlord increase.
“Without costing me anything, I can dramatically reduce the turnover, and that dramatically reduces my cost of operating,” Turner explains.
For Turner, it’s the latest example of making a social impact while making a profit. As Chairman, CEO and Co-Founding Partner of Canyon Capital Realty Advisors LLC, he has made a living sniffing out real estate opportunities that are, in his words, “overlooked, misperceived or difficult to underwrite.” His goal for investing is a “triple bottom line” – environmentally-responsible projects that yield high financial returns for investors while providing new opportunities to community residents.
“At the end of the day, the only way to really cure a societal issue is through a sustainable solution,” Turner says. “That means profitable.”
Among his many endeavors: a collaboration with former NBA star Earvin “Magic” Johnson to revitalize urban areas, and a joint venture with former tennis pro Andre Agassi to build 75 urban charter schools.
Turner now spreads his ideas about social impact by bringing speakers to Wharton who hold similar values, often accomplished big-name stars — such as Agassi and Johnson, rapper Chris “Ludacris” Bridges, and actress Eva Longoria — who have achieved success in their careers and now channel fame and wealth towards social good.
Turner says he hopes their stories will inspire Wharton students to make meaningful changes in society. “I wanted to try to reach as many students as possible and at least open their eyes to the possibilities that there are different metrics about how to measure success,” he says.
As the “melting pot for tomorrow’s leaders,” Wharton is the best training ground in the country for students who want to make a social impact, Turner says. Wharton gives students the business acumen to analyze the economics behind social problems. And interdisciplinary coursework through the University of Pennsylvania’s other schools would provide the necessary background for workable, sustainable solutions.
“We at Wharton are black belts in financial analysis,” he says. “Non-financial issues have a financial impact on business and on society. And no one is necessarily quantifying those things.”
Social problems have been addressed by philanthropy and government, but neither are scalable and there are gross inefficiencies, Turner says. “If you really want a cure, you have to have a sustainable solution. That’s what Wharton is all about.”
By Leslie Pappas, November 2012